Lesson 3: Access to Capital

What You’ll Learn: Creativity isn’t free. Nor should it be. Even if you count every penny and squeeze it to death before spending it, you still have hard costs, from supplies to marketing. This lesson will walk you through various options, and later on, we’ll take a look at how you can create revenue streams that will help fuel further growth and wealth.

Access to Capital (continued)

Funding Options

At some point, you’ll need money to cover your business expenses, launch new marketing initiatives to bring in new business or attend a major trade show where your ideal clientele is sure to be.

We’ll offer up some basic ideas. There are a ton more in our book, Startup Wisdom, 27 Strategies for Raising Business Capital. Even though the book is written with startups in mind, many of the financing strategies can be scaled to the needs of creatives bent on running their own business.

Dip into your own pocket

You already know this one. This is how most creatives finance their business. They may have some savings in the bank and some money coming in from sales here and there, and that’s what funds the company.

Some people will tell you that you should use other people’s money whenever possible. That deserves a big duh! But rarely do you get something for nothing, and the “cost” of using that money can cause you to go deep in debt as you try to make repayments when your cash is running short again. If your cash flow starts running in the red instead of the black, your decision-making process will be clouded by a fear of failure.

In action: GoPro, Inc. founder Nick Woodman was disappointed in the cameras that were available to capture photos of him surfing in Australia. Deciding to make an all-in-one camera, Nick raised $10,000 selling beads and shells out of the back of his van, moved back with his parents and took odd jobs to pay for the design of his new idea. At the end of 2004, GoPro had $150,000 in revenue. In 2021, sales were $1.2 billion.

The family and friends plan

Family and friends are another potential source, and they are often more than willing to kick in some bucks for an idea that shows promise. Remember that owing relatives and friends can be costly in more ways than one. If your business goes south, your friendships and relationships can become severely strained. Even if there are supposedly no strings attached, there may be unspoken strings. That said, you can treat this like any other funding strategy. You can make your pitch irresistible and ask your family and friends to become investors. For a piece of the action (equity, a balloon payment down the road, a percentage) or other return on their investment, they can help you fund your dream. This is where many hands make lighter work. If you need $12,000 and have a dozen friends and family members, that’s $1,000 a pop. If you have two dozen in your network, it’s only $500 a pop. If you opt to go this route, make sure the pitch is about your business idea and not you. Never make it personal, as it may come back to haunt you.

A loan again, naturally

While banks have more restrictive lending policies, credit unions may be an option if you need a small business loan. Credit unions are there for their customers, who are also members and shareholders. They typically serve a specific audience, such as employees of a large company or a particular community or military brank. You’ll want to do some research to find out which credit union would be best for you in terms of loan products and rates. Of course, you’ll also need to become a member and open an account.

If you are seeking a personal or secured loan, whether it’s through your bank or a credit union, pay close attention to the 5 Cs of Credit: Capital/Cash, Capacity/Cash Flow, Collateral, Character and Conditions. Many loan programs want you to kick in 25% to 30% of the total amount you are requesting and want to see proof that you will successfully pay it back. You may also need to put up some collateral. This is where a business plan comes in handy.

In action: A Wenatchee photographer’s equipment had become outdated as the world shifted from film to digital imaging. To find financing, he decided to open an account at his local credit union. His credit wasn’t the best, but because he is a member, they offered him a secured credit card to raise his credit score. Six months later, he got a small loan and paid it back. With his credit score improving because of these loans, his loan officer connected him to a Small Business Administration loan for $10,000 so he could buy new equipment to grow his business.

Crowdfunding as a strategy

There have been incredible success stories and some colossal failures in crowdfunding. Remember the Coolest Cooler? It took in a cool $13 million, but because of the inexperience of its management team and an inability to source reliable suppliers, the company never delivered all the high-tech coolers it promised to Kickstarter investors and ended up going out of business.

If you’re going to go the crowdfunding route, have an idea that you can actually execute and be sure you have a large social media pool to draw investors from. You need to nail your marketing, promotion and fulfillment to make it all work, especially since your funding window is limited. If you don’t reach your goal, it all goes back to the people who invested in you and your idea.

In action: Internet cartoonist Matthew Inman wanted to create a card game for kids seven and older so he started a Kickstarter campaign. Exploding Kittens became one of the most quickly funded campaigns on the site, bringing in $8,782,571. Exploding Kittens has raked in more than $50 million since.

Barter boldly

Bartering and trading are two of the lesser-known strategies creatives should use to build and stretch available capital. Use your network of contacts, skills and expertise as negotiating tools to get the resources, equipment and supplies you need to build your business. Every dollar counts when you start out, so you want to try to hold onto as much real capital as possible to fund activities that can’t be traded or bartered. Giving away something that comes easy to you can get you a huge return on your investment if you can deliver on your promises. It can also open doors to other opportunities within the recipient’s network of contacts.


These small loans are particularly suited to businesses in the startup phase that don’t require large amounts of cash. Microloans can range from $500 to $35,000 and are funded through private institutions and the Small Business Administration. The term of the loan can be two to six years with favorable interest rates. A business plan is essential for any startup seeking a microloan. The downside is that microloans cost the same to set up and administer as larger loans, so they may not be as competitive in terms of fees and interest.

In action: OlyKraut is a small, woman-owned, gourmet sauerkraut company in Olympia, Washington, that opened in 2008. Early on, the owners took advantage of training from Enterprise for Equity that led to microloan funding for expansion. The owners started their small enterprise on a shoestring. Once their product became popular, they used two consecutive microloans under $10,000 to expand production with a kitchen upgrade and some additional equipment. They recognized that honoring their values by sourcing locally, using only organic ingredients and paying their employees well would give them an edge in the market. The infusion of cash was vital to the company’s success and enabled them to grow.